From wage updates to consumer protection to small-business development, what we saw enacted in 2023 – and what's in store for 2024
As 2023 comes to a close, it is the perfect time to look back and review recent Oregon legislative changes that will impact the construction industry in the coming year.
The 82nd Session of the Oregon Legislature adjourned on June 25th, the designated constitutional date for sine die. The 2023 Legislative Session was unique because it was the first in-person session since the beginning of the COVID-19 pandemic. Further, the legislative body experienced various changes, including bidding farewell to one of the longest-serving members of the body, Senate President Peter Courtney, and welcoming a large contingent of new legislators who had never served inside the Capitol and had rarely attended in-person meetings with their colleagues or the public.
Despite these circumstances, the Oregon Legislature introduced 2,970 bills for consideration and passed 653 bills into law. Several of those bills that passed (or were defeated) directly impact the construction industry. The following article provides an overview of a selection of those bills and describes how they may impact public and private construction projects in the coming year.
Bills that passed into law
Bills that were defeated (but we will likely see again in 2024)
- HB 2870: Retainage Fix
In 2019, the Oregon Legislature passed HB 2415, which created a requirement that retainage be held in an interest-bearing escrow account for certain public and private projects. However, due to the unclear language of HB 2415, it led to various cascading issues for the construction industry. Financial institutions, for instance, were reluctant to open escrow accounts without imposing substantial fees, often surpassing the amount of retainage interest. Disputes over retainage expanded from determining the owed amount to examining whether retainage was held in a compliant "escrow account" and which party should cover associated account fees. HB 2415 also didn't define "escrow account" or address fee responsibilities.
HB 2870 sought to amend the retainage framework by eliminating the "escrow account" requirement and allowing contractors and subcontractors to submit a retainage bond instead of retainage on all construction projects. Later amendments excluded smaller private construction projects from the retainage bond framework. Despite broad support from contractor and subcontractor associations, as well as the Oregon State Bar Construction Law Section, the Oregon Legislature was unable to pass HB 2870 before the end of the 2023 Legislative Session. However, industry associations have committed to bringing the bill with an emergency clause in the next legislative session, indicating that if the bill passes, it would take effect in early 2024.
- HB 2057: Wage Theft Liability
HB 2057 aimed to hold general contractors liable for their subcontractors' unpaid wages. While addressing wage theft in the construction industry, the bill did not target the bad actors directly responsible for non-payment. Instead, it shifted liability onto general contractors to pay for unpaid subcontractor wages, with a six-year statute of limitations allowing liability even years after the final payments to subcontractors. The bill failed to advance into law after it died in the Senate.
- SB 848: Duty to Defend Design Professionals
In successive legislative sessions, design professional organizations and individuals proposed legislation to shift the burden of litigation costs from construction agreements through certain indemnity agreements. Originally intended to eliminate design professionals' obligation to cover litigation costs for projects, even when their negligence caused harm, SB 848 was later amended to apply exclusively to public works projects where the design professional was in direct contract privity with the public owner. Nevertheless, the bill ultimately stalled in the Ways and Means Committee. Given its repeated appearance in recent legislative sessions, it wouldn't be surprising if a version of this bill is reintroduced in the coming session.
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